A robber puts a gun to Jack Benny. He says, "Your money or your life?" There is an awkward moment of silence. The thief yells, "Did you hear me! Your money or your life?" Jack finally says, "I'm thinking."
The phony Fed chairman has the same dilemna with our economy. He will not take as long as Jack to decide with the question, the economy or your job? He will answer after he has rehearsed a thousand times to show a deep consideration. We, at Evolution know the answer, his job.
Nevertheless, we are at an inflection point. The January Barometer is an old indicator that fundamental funds use to determine their bets. If the market is down for the month, the saying is that this will hold true for the year. The opposite says an up month and that leads to an up year. We do not put faith in this voodoo. We, at Evolution use charting and fundamentals to make our decision.
There is another indicator that says the third year in a presidents term is positive. This is mostly true as an administration uses its position to push stimulus. However, during inflation periods, this president cycle is not positive.
Over the course of time, Dear Reader you should know that our first indicator is labor and their wages. This has been in decline since the 1970s. New technology and improved techniques have seen the gains by this point go straight to shareholders. The weak CEOs forget that it is their employees who go to work to perform the tasks week after week, year after year, but they never receive any rewards. If there is one positive from COVID, it is this. Workers had a chance to find a new direction with the shortage of labor. The result is better wages. Even the low-paying service and retail had gains. However, this aspect soon lost its value due to inflation. The question is who is responsible for it? We agree with Milton Friedman, money printing. Who prints the money? The Federal Reserve.
Our next indicator looks at fundamentals. At the moment, the government is controling the narrative. Last weeks jobs report has Biden claiming strong job growth with a new lower unemployment rate of 3.5%. This is decieving and a lie. If you take the big picture with labor participation, it reveals that too many people are not counted by their system. The numbers run in the millions! In addition, the one field that improved labor and wages, technology is laying off workers.
The leader, Amazon is dropping 18,000. Salesforce is cutting 10% of its workers. Facebook is showing the curb to 11,000. Twitter cut half of its labor force. Overall, teck is losing 150,000 jobs. Even the financials like Goldman is giving pink slips to 4,000. This is the writing on the subway walls.
Even though the market showed a strong rally last Friday, the highest that it will climb is to the bottom of the last retracement. Our charting with Fibonacci says that the Dow will find strong resistance at 35,000 and NASDAQ at 11,000. Are we right? Wrong? Whatever the outcome, at least we are not vague. We don't hedge or beat around the bush. If you at least agree on that point, please tell two people so that our message gets out and our viewership grows. Thank you.
King $Dollar...
...is always central to the market. We see it bouncing up to 107. If it does, the 200-day moving average will experience a "death cross." The dollar could finally give up all its gains. This does not happen overnight, but it forecasts the future. If this happens, the commodities will take off. If they take off, inflation will not go anywhere. We are truly in an inflection point.
Some analysts now think that the market won't pivot until the Fed begins cutting rates again. It would be a clear sign that the economy and his job is in trouble. If, and when they do, the Federal Reserve will create this whole mess again. However, we feel that one of these days, this technique won't work. It will be a day of reckoning. It is just another reason why we say, "End the Fed!"
